Business Formation: Limited Liability Company

A limited liability company is a form of business organization that is designed to combine the tax benefits of a partnership with the limited liability protection of a corporation.  Limited liability companies are the preferred business entity choice for new businesses.

  -A LLC gives members the flexibility in choosing the tax status of the entity.  With only one member, he/she may choose to be taxed as a sole proprietorship or corporation; with two or more members, they may choose to be taxed as a partnership or corporation.  Generally members are not held personally liable for the debts and obligations for the business.

  -The profits and losses when taxed as a sole proprietorship or partnership may be passed through to the owners, eliminating double taxation.

  -The profits and losses of a LLC are typically allocated among the members in a proportion to his/her contributions.  However, the articles of incorporation may provide for another allocation of the profits and losses.

  -Members of a LLC may participate in active management without risking loss of his/her limited personal liability.

  -Limited liability companies combine the tax advantages of a sole proprietorship or general partnership with the limited liabiity protection of a corporation.

To form a Minnesota Limited Liability Corporation (LLC) one or more persons may file Articles of Organization and pay a filing fee of $160.00, as of the writing of this article.  The Limited Liability Corporation does not exist until the Secretary of State reviews, approves, and files the Articles of Corporation.  Filing fees for subsequent amendments are $35.00 and filing fees for mergers are $60.00.

Foreign Limited Liability Corporations may register by filing A Certificate of Authority to transact business in Minnesota form and pay a filing fee of $185.00.

An annual renewal is required once each year, which must be filed by December 31^st.  There is no charge for filing unless the company has been Administratively terminated or revoked.  A reinstatement fee for a company that has been terminated or revoked is $25.00.